AT&T Keeps 3G Customers (For Now)

AT&T
has more bars in more places, and 2.7 million more customers are making use of them.

On Thursday
AT&T
reported fourth-quarter earnings in line with Wall Streets expectations and said it added 2.7 million wireless subscribers in the period, the second-highest quarterly net gain in the companys history. The iPhone magic is still working for Ma Bell.

The figure came in well ahead of that of rival
Verizon Communications
, which said earlier this week that it added only 2.2 million customers in the recent quarter. But Verizons total customer base was 91.2 million at the end of 2009, giving it the most retail customers of any U.S. wireless provider.

Of AT&Ts 2.7 million new subscribers, 1 million were for non-phone devices such as e-readers, AT&T said. AT&T supports the most recent version of
Amazon
s Kindle,
Sony
s Reader and
Barnes & Noble
s Nook.

AT&T got another boost on Wednesday after
Apple's
celebrity/chief executive, Steve Jobs, revealed that it would be the sole U.S. data carrier for the tech giants newest invention, the iPad, a multimedia tablet-style computer marvel. (See Apple Debuts iPad At $499.)

AT&T is already the sole service provider for Apples popular iPhone, but its patchy support of the coveted smart phone's 3G network has generated consumer ire for months, with users across the country complaining of dropped calls and dead zones. Analysts had speculated that Apple may introduce an iPhone for Verizons network as well, but it was not to be. (See Apple: Can You Hear Me Now?)

Experts cite three main reasons to explain why AT&T prevailed over its competitors at a time of great stress in its relationship with Apple: the desire for both companies to preserve their alliance, AT&T's Wi-Fi assets and network readiness. (See Why Apple Is Sticking With AT&T.)

Analyst Christopher King at Stifel Nicolaus said it was unclear what motivated Apple to stay with AT&T. King said the decision did not necessarily preclude the possibility that the iPhone could come out with another carrier, like Verizon, later in the year.

AT&T said it would spend an additional $2 billion this year to improve its wireless network, adding more cell towers and connecting the towers to faster, fiber-optic lines. The move is in an effort to curb complaints about the range and consistency of its network, especially from iPhone users.

"Wireless is our No. 1 investment priority," said John Stankey, head of AT&T's Operations division, on a conference call with analysts.

"We had a solid 2009 and led the industry in the biggest growth driver--mobile broadband," said AT&T Chief Executive
Randall L.
Stephenson
Randall L. Stephenson
. "Looking ahead, customer demand for connectivity, particularly mobile broadband and IP data, continues to be strong, and AT&T is well positioned at the center of this growth.

Dallas, Tex.-based AT&T enjoyed its best ever wireless subscriber churn level in the quarter, meaning more customers subscribed to AT&Ts services than discontinued. Churn rates represent a key metric in the phone service industry, as several providers typically offer service in a given area and customers can easily switch from one to another.

In the recent quarter, AT&T said it earned $3.1 billion, or 51 cents per share, on sales of $30.9 billion, compared with year-earlier profits of $2.5 billion, or 41 cents per share, on revenues of $31.1 billion.

Earlier this week Verizon said its robust wireless business was not sufficient to offset its dwindling legacy landline business, and the New York City company swung to an unexpected quarterly loss of $653 million, or 23 cents loss per share. (See Verizon Loses Its Signal.)

Amid the heated competition with rivals AT&T and
Sprint Nextel
, Verizon cut the cost of its unlimited calling plans while requiring customers to buy data plans as of Jan. 18. Verizon now offers a U.S. calling plan with unlimited minutes for as low as $69.99 a month, a sharp discount from the previous price of $99.99. (See Verizon Wireless Cuts Unlimited Calling Costs.)